Loonie Rises Along with Stocks and Commodities

NEW YORK (Forex News Now) – In forex trading news, the Canadian dollar grinded higher with stocks and commodities after the G20 finance ministers pledged to avoid “competitive devaluation” over this past weekend.

The Canadian dollar is getting some support from a combination of precious metals and petroleum products, and continues to be highly correlated to the moves of the S&P 500 Index.

G20 officials, ending a meeting in South Korea on Oct. 23, agreed to refrain from “competitive devaluation” and allow markets to set foreign-exchange values, seeking to calm fears over a potential trade war.

Economic Data

In forex trading news last week, Canadian retail sales unexpectedly rose 0.5 percent in August to C$36.1 billion ($35.2 billion), the fastest pace in six months, Statistics Canada reported on Oct. 22. Economists surveyed expected a 0.1 percent decline.

Consumer prices rose 0.2 percent in September, the statistics agency reported last Friday. Economists predicted that monthly prices would rise by 0.1 percent, according to the median forecast.

Additionally, the Bank of Canada inflation index rose by 0.2%, which met analysts’ expectations.

Later in the week, both the Canada and the US will release GDP reports. Canada is reporting its August GDP which is expected to grow by 0.3%, compared to a -0.1% month over month. The US is reporting preliminary 3rd quarter GDP, which is expected to grow at 2.2%.

Technical Picture

Canada’s currency reached parity on October 13 for the first time since April, as the greenback slumped against most currencies on speculation the Fed will pursue a course of further bond purchases to stimulate the economy.

The USD/CAD has been trading in a seven big figure trading range since June, but the move below parity in October was the first breach of par since April.

The weekly charts reflect a picture of a currency pair that is content on grinding lower. The long term weekly trend line that connects the low in June of 2009 at .9813 and the low in April of 2010 at .9953, produces trend line support at .9985, which is 5 ticks above the low of .9980 made on October 13.

Additionally, the weekly Bollinger Bands of a 20-week moving average continue to encapsulate the trading range of the USD/CAD. The current range of 1.0020 and 10650, continue to reflect a currency pair that is range bound.